By Beting Laygo Dolor, Contributing Editor
For the Philippine economy badly hit by the global coronavirus pandemic, the “worst is over,” Bangko Sentral ng Pilipinas (BSP, the Philippines’ central banking authority) Gov. Benjamin Diokno said last week.
During an online forum for local media, Diokno said he foresees “a ‘hockey stick’ like recovery, with the lowest point in the second quarter.
But, he added, “the third quarter will be better and the fourth quarter will be even stronger.”
Diokno said the Philippines can expect a strong rebound next year.
The Duterte administration expects GDP to shrink by two to 3.4 percent this year but projects growth to hit between eight and nine percent in 2021 and between six and seven percent in 2022.
A think tank, however, disagrees with the rosy picture painted by the BSP head.
Capital Economics projected the country’s GDP to have shrunk by almost 20 percent in the second quarter of this year, when the government-imposed lockdown of Metro Manila and the rest of Luzon was at its peak.
In a report released last week, Capital Economics stated, “We estimate that the Philippine economy shrank by almost 20 percent year-on-year in Q2, after output fell 0.2 percent in Q1.”
If that projected contraction proves correct, it will be the steepest decline in quarterly GDP in history and push the country into a full-blown recession.
The Philippines’ jobless rate soared to 17.7 percent last April from just 5.1 percent for the same period last year. This translated to some 7.25 million jobless Filipinos, the highest level since 2005.
To make matters worse, more than 100,000 overseas Filipino workers lost their jobs and were forced to return home.
Diokno said he expects the July unemployment figures to be released next month to be better than the April figures.
The Philippine Statistics Administration will also release Q2 GDP figures on August 6.
Diokno’s rosy projection for the Philippine economy came just before the World Health Organization (WHO) said that the country failed to contain the coronavirus.
The WHO claim was buttressed by a statement from a number of health workers organizations pleading with the government for a return to stricter quarantine in Metro Manila, as nearly all the hospitals in the metropolis were near breaking point, unable to accept more Covid-19 patients.
Prior to that statement, Diokno insisted that the country had sufficient capacity to respond to the health crisis. He said wider, stricter lockdowns would no longer be needed and only targeted ones would be imposed at the barangay (village) level.
According to Diokno, “We have to be hopeful that things are starting to open up and that more people are going to get employed.”
The opposing view from Capital Economics can be attributed to the government’s ultra-strict quarantine measures that forced countless small- and medium-sized businesses to close shop throughout the main island of Luzon, including Metro Manila. The Duterte administration enforced a near total lockdown in mid-March, lasting until May, when the economy started to gradually reopen.
During that harsh lockdown period, a “massive economic impact” was felt nationwide, according to the think tank.
The reopening of the economy, however, was only partially successful as business activity remained “depressed and is recovering much slower” than other countries in the region, said Capital Economics.
In its report, Capital Economics said, “there has been more evidence that the fiscal response in the Philippines has been inadequate in the face of a huge slump in activity.”
In the Asia Pacific region, the worst performing economies according to Capital Economics are the Philippines, Thailand, and India.
During his State of the Nation Address last month, President Rodrigo Duterte said a full opening up of the Philippine economy “is not an option” unless a vaccine can be developed to cure the coronavirus pandemic.